Interim Report - 1 of 28

The Interim Report 2014 of HSBC Holdings has been prepared in accordance with the requirements of English law, and liability in respect thereof is also governed by English law. In particular, the liability of the Directors for this report is solely to HSBC Holdings.

Certain defined terms

Unless the context requires otherwise, 'HSBC Holdings' means HSBC Holdings plc and 'HSBC', the 'Group', 'we', 'us' and 'our' refer to HSBC Holdings together with its subsidiaries. Within this document, the Hong Kong Special Administrative Region of the People's Republic of China is referred to as 'Hong Kong'. When used in the terms 'shareholders' equity' and 'total shareholders' equity', 'shareholders' means holders of HSBC Holdings ordinary shares and those preference shares classified as equity. The abbreviations 'US$m' and 'US$bn' represent millions and billions (thousands of millions) of US dollars, respectively.

Interim financial statements and notes

HSBC's Interim Consolidated Financial Statements and Notes thereon, as set out on pages 206 to 268, have been prepared in accordance with the Disclosure Rules and Transparency Rules of the Financial Conduct Authority and International Accounting Standard ('IAS') 34 'Interim Financial Reporting' as issued by the International Accounting Standards Board ('IASB') and as endorsed by the European Union ('EU'). The consolidated financial statements of HSBC at 31 December 2013 were prepared in accordance with International Financial Reporting Standards ('IFRSs') as issued by the IASB, and as endorsed by the EU. EU-endorsed IFRSs may differ from IFRSs as issued by the IASB if, at any point in time, new or amended IFRSs have not been endorsed by the EU. At 31 December 2013, there were no unendorsed standards effective for the year ended 31 December 2013 affecting the consolidated financial statements at that date, and there was no difference between IFRSs endorsed by the EU and IFRSs issued by the IASB in terms of their application to HSBC. Accordingly, HSBC's financial statements for the year ended 31 December 2013 were prepared in accordance with IFRSs as issued by the IASB. At 30 June 2014, there were no unendorsed standards effective for the period ended 30 June 2014 affecting these interim consolidated financial statements, and there was no difference between IFRSs endorsed by the EU and IFRSs issued by the IASB in terms of their application to HSBC.

HSBC uses the US dollar as its presentation currency because the US dollar and currencies linked to it form the major currency bloc in which HSBC transacts and funds its business. Unless otherwise stated, the information presented in this document has been measured in accordance with IFRSs.

When reference to 'underlying' is made in tables or commentaries, the comparative information has been expressed at constant currency (see page 19), the impact of fair value movements in respect of credit spread changes on HSBC's own debt has been eliminated and the effects of acquisitions, disposals and dilutions have been adjusted as reconciled on page 22. Underlying return on risk-weighted assets ('RoRWA') is defined and reconciled on page 43.

Contents

Overview

Who we are .................................................................

 1

Our purpose ................................................................

 1

Highlights ...................................................................

 2

Group Chairman's Statement ......................................

 4

Group Chief Executive's Business Review ....................

 6

Value creation and long-term sustainability .................

 8

Our strategy ................................................................

 9

Business and operating models .....................................

11

Global Standards ..........................................................

14

Risk ............................................................................

16

Interim Management Report

Financial summary1 .....................................................

19

Global businesses1 ........................................................

45

Geographical regions1 ..................................................

61

Other information ......................................................

95

Risk1 ...........................................................................

99

Capital1 .......................................................................

175

Board of Directors and Senior Management

199

Financial Statements

Financial statements ...................................................

206

Notes on the financial statements1 ..............................

214

Directors' Responsibility Statement ............................

269

Independent Review Report by KPMG Audit Plc toHSBC Holdings plc ..................................................

270

Additional Information

Shareholder information1 ............................................

271

Cautionary statement regarding forward-looking statements ..................................................................

280

Abbreviations ..............................................................

281

Glossary ......................................................................

284

Index ..........................................................................

293

1. Detailed contents are provided on the referenced pages.

Cover images: internationalisation of the renminbi

The images show the views from HSBC's head offices in Shanghai, Hong Kong and London - the three cities that are key to the development of China's currency, the renminbi ('RMB'). The growth of the RMB is set to be a defining theme of the 21st century. HSBC has RMB capabilities in over 50 countries and territories worldwide, where our customers can count on an expert service.

Ø Profit before tax was down 12% at US$12.3bn on a reported basis. Underlying profit before tax was down 4% at US$12.6bn.

Ø We continued to implement our three strategic priorities to grow the business and dividends, implement our Global Standards programme, and streamline our processes and procedures.

Ø CRD IV end point basis common equity tier 1 ratio was 11.3%, 0.4% higher than at the end of 2013.

Profit before taxation(Reported basis)(US$bn)

Underlying profitbefore taxation(US$bn)

Profit attributable to the ordinary shareholders ofthe parent company(US$bn)

Earnings per share(US$)

Dividends per ordinary share(in respect of period) 1(US$)

Dividend payout ratio(%)

Cost efficiency ratio2(%)

Loan impairment charges tototal operating income(%)

Total equity(US$bn)

Total assets(US$bn)

Loans and advancesto customers3(US$bn)

Customer accounts3(US$bn)

Annualised return on average ordinary shareholders' equity4(%)Half-year to:

Post-tax return on averagetotal assets(%)Half-year to:

Ratio of customer advancesto customer accounts3(%)

Common equity tier 1 ratio(end point)(%)

Common equity tier 1 ratio(year 1 transition)(%)

Total capital ratio(year 1 transition)(%)

Risk-weighted assets(US$bn)

CRD IV5

Core tier 1 ratio(%)

Total capital ratio(%)

Risk-weighted assets(US$bn)

Basel 2.55

Pre-tax return on average RWAs6(%)Half-year to:

Estimated leverage ratio7(%)

Closing market price

US$0.50 ordinary shares in issue

19,071m

30 Jun 2013: 18,627m

31 Dec 2013: 18,830m

Marketcapitalisation

US$193bn

30 Jun 2013: US$196bn

31 Dec 2013: US$207bn

London

£5.93

30 Jun 2013: £6.82

31 Dec 2013: £6.62

Hong Kong

HK$78.60

30 Jun 2013: HK$81.25

31 Dec 2013: HK$84.15

AmericanDepositary Share8

US$50.80

30 Jun 2013: US$51.90

31 Dec 2013: US$55.13

Total shareholder return9

Over 1 year

Over 3 years

Over 5 years

To 30 June 2014 ..............................................

92

112

149

Benchmark:

- MSCI Banks10 .................................................

110

126

164